Housing experts welcomed the decision, saying it would help home owners and the housing market.

Home Information Packs were introduced by the labour govt to “speed up” [...]]]> Home owners will no longer have to pay for a Home Information Pack (HIP) when selling their property after the new coalition government today scrapped the controversial red tape packs.

Housing experts welcomed the decision, saying it would help home owners and the housing market.

Home Information Packs were introduced by the labour govt to “speed up” the house selling process by obliging sellers to provide certain information about their property when it is first put up for sale.

Labour Ministers suggested the move would save consumers £870 million over the next 10 years as the packs are paid for sellers and cost several hundred pounds each.

However, energy performance certificates – which show how energy efficient a property is – will be retained.

The continuing energy survey is eu red tape- over which UK politicians are powerless…

Coalition Housing minister Grant Shapps said: “Home sellers will get immediate relief. It means they can put their house on the market without having to shell out thousands of pounds.”

Speculation has been rife about when exactly the packs would be scrapped and the government said it had moved quickly to make today’s announcement to avoid uncertainty and to prevent a slump in an already fragile housing market.

Housing experts welcomed the decision, saying it would help home owners and the housing market.

Kirstie Allsopp, the television presenter, said “Is absurd that there was ever this additional expense. I am thrilled to bits because it is really important to help people to sell their home quicker.”

However, the decision is unlikely to be popular with thousands of people who retrained as home inspectors to provide the packs as they are likely to lose their jobs once they are no longer compulsory.

Mike Ockenden, director general of the Association of Home Information Pack Providers, said: “More than 3,000 jobs will go and 10,000 will be affected as a result of the suspension of HIPs.”

Re-Mortgager reckons at £25K UK average earnings, that’s a saving  to cash strapped property owners of £75 million this year alone!

Jean-Claude Trichet, the President of the ECB, said that it was too soon to end its support measures. Apart from reducing [...]]]> The European Central Bank (ECB) said yesterday that it was in no mood to withdraw the emergency measures it has been using to stimulate the eurozone economy in the face of the global financial crisis.

Jean-Claude Trichet, the President of the ECB, said that it was too soon to end its support measures. Apart from reducing interest rates, these have included pumping extra cash into the eurozone in an attempt to kick-start lending.

Speaking after the ECB voted to maintain interest rates in the eurozone at 1 per cent, Mr Trichet said the significant contraction in the 15-member zone had ended, but dismissed suggestions that the bank should now begin to unwind its support.

He added: “Today is not the time to exit. It is more of a bumpy road ahead. Uncertainty is high. Prudence and caution are still of the essence. Overall, the recovery is expected to be rather uneven.”

Mr Trichet confirmed that, later this month, the ECB would offer to lend unlimited funds to banks for the next year at a flat rate of 1 per cent. This is in line with the rate charged on the €442 billion (£384 billion) of 12-month funds that the ECB made available in June. The move defied predictions in some quarters that it might charge banks slightly more in a sign that monetary tightening was imminent.

His comments sent yields on the two year bonds issued by leading eurozone economies, such as Germany, to their lowest levels for six months.

Standard & Poor’s (S&P;) downgraded the long-term rating of the former “Celtic Tiger” by a further notch to [...]]]> Ireland had its credit rating cut for the second time in three months and was warned that it could fall further following concerns about the “continued fragility” of its banking sector and doubts about the Government’s bailout plan.

Standard & Poor’s (S&P;) downgraded the long-term rating of the former “Celtic Tiger” by a further notch to AA, from AA+.

The Republic was stripped of its top AAA ranking in March when S&P; concluded that the meltdown in the country’s finances would take far longer to repair than the Government envisaged.

Today S&P; warned: “The rating could be lowered again if asset quality in the Irish banking system deteriorates at a faster pace than we expect … and if, as a result of its suport for the sector or due to an even more pronounced downturn in economic growth, the Government’s fiscal performance weakens further than we currently assume.”

The fresh downgrade was triggered, S&P; said, in part by poor recent figures from Anglo Irish Bank.

In May, in its first results since nationalisation, Anglo reported losses of €4 billion (£3.4 billion) for the six months to March 21, compared with a €667 million profit in the same period last year while provisions for bad loans were €4.1 billion, compared with just €33 million last year.

The losses, S&P; said, were at the upper end of its own expectations and highlighted the “continued fragility of the Irish banking sector”.

S&P; is also sceptical about the power of Ireland’s new National Asset Management Agency (NAMA) to revive the fortunes of its banking sector. The agency is a “bad bank” which will take on the toxic debts of financial institutions.

The ratings agency considers NAMA’s ability to meet its financial objectives is “uncertain because of the risk that cashflows from its assets could fall below its funding costs”.

Overall, S&P; concluded, the cost to the Government of bailiing out the banking sector will be “significantly higher than what we had expected when we last lowered the rating in March … and consequently that the net general government debt burden will also be significantly higher over the medium term”.

Ireland’s economy has been savaged by the global economic downturn as well as a slumping property market, soaring unemployment and tumbling retail sales. In September, Ireland became the first eurozone country to fall into an official recession after it declared two successive quarters of negative economic growth.

Prior to the current downturn, the Irish economy had not experienced a recession since 1983 and enjoyed double-digit growth in the 1990s.

In a bid to salvage the situation the Irish Government has pumped €7 billion into its two top lenders, Allied Irish Bank and Bank of Ireland.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The failure of a government bond auction yesterday heightened fears that the tiny Baltic state will have to devalue its currency, the lat, [...]]]> Latvian crisis deepens as Europe debates aid as Latvia has been urged to tighten its public finances with fears escalating that the recession hit Eastern European country is facing a huge currency devaluation.

The failure of a government bond auction yesterday heightened fears that the tiny Baltic state will have to devalue its currency, the lat, which could have a huge impact on the rest of the region and other EU states.

If the lat, which is pegged to the euro, is devalued, Estonia and Lithuania’s currencies are likely to follow suit.

Sweden would also be affected because large Swedish banks, such as Swedbank and SEB, control 50 per cent of Latvia’s lending market.

Some economists believe that the panic caused by a devaluation in the Baltic States could spread to other weaker members of the EU, such as Romania and Hungary, and even older members such, as the Irish Republic, Greece and Portugal.

This could mean that the stronger economies in the eurozone, such as Germany, would have to bail out their fellow EU countries or risk the break up of the single currency.

Latvia, a recent addition to the EU, was bailed out by the Union and the International Monetary Fund (IMF) in December after its economy was pummelled by the financial crisis.

It has followed a monetary policy of “fixing” its exchange rate and encouraging its citizens to borrow in euros and Swiss francs, which is one of the reasons it is now in so much debt.

However, there are fears that this could lead to more civil unrest in Latvia, where the previous Government was forced to resign in February as rioting erupted in Riga over unemployment and poverty.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The European Central Bank is now following the policy first adopted by the Bank of England and America’s Federal Reserve

The European Central Bank has cut interest rates a quarter point to a record low [...]]]> Rearguard action by Germans to stave off ‘undesirable option’ dismissed by central bank’s governing council as ECB cuts loans rates to 1%.

The European Central Bank is now following the policy first adopted by the Bank of England and America’s Federal Reserve

The European Central Bank has cut interest rates a quarter point to a record low of 1pc and embraced quantitative easing (QE) for the first time, catching markets off guard with plans to buy €60bn (£53.5bn) of covered bonds.

The hotly disputed move to purchase assets brings the ECB into line with the central banks of the US, Britain, Japan, among others, that have begun “printing” money to stave off debt deflation.

This is likely to morph into fully-fledged quantitative easing. It’s how the Fed began last October when it started purchasing commercial paper.

The step-change in policy follows an open clash within the ECB’s governing council over its handling of Europe’s worst slump since World War Two, pitting national governors from southern Europe and Ireland against the ECB’s German-led hawks.

Bundesbank chief Axel Weber has fought a rearguard battle to head off QE, calling it an “undesirable option” that risked inflation later.

The majority also overruled his insistence on a 1pc “floor” for interest rates. Jean-Claude Trichet, the ECB’s president, said the bank had not ruled out further cuts, “depending on future circumstances”.

The refusal to accept Frankfurt’s lead is a turning-point for ECB, which inherited its authority a decade ago from the Bundesbank. The upsets touches on a raw nerve in Germany where critics have always suspected that EMU would turn “soft”. It may set off a political backlash.

Mr Trichet said covered bonds were picked because they have been hit hard by the crisis, but refused to rule out further assets later. The exact details are to be agreed at the ECB’s June meeting.

Covered bonds or “Pfandbriefe” form the AAA backbone of Europe’s mortgage markets. “They are a very safe asset, so this is the least controversial market,” said Mr Callow.

The ECB also extended its liquidity scheme from 6 to 12 months and opened its window to the European Investment Bank, giving it a new crisis role.

David Marsh, author of The Euro – The Politics of the New Global Currency, said the ECB is loath to follow Anglo-Saxon banks in purchasing government bonds because this would give most help to big debtors such as Greece and Italy. “They don’t want to be seen as bail-out merchants by acting as a bond purchaser of last resort for hard-pressed nations,” he said.

The ECB has been widely criticised for its slow response over recent months, although it has quietly let its overnight deposit rate fall to 0.25pc. “The ECB needs to get ahead of this like the Bank of England or we’ll face a Japanese scenario for the financial system,” said Marco Annunziata, economist at Unicredito.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The market wanted to see more [...]]]> Last month the European Central Bank (ECB) surprised the markets by only cutting interest rates by 25 basis points to 1.25%- a record low but when compared against the UK interest rates of 0.5% and against the US of 0-0.25% then comparatively still high in the current global climate.

The market wanted to see more aggressive action amid rising unemployment and shrinking growth and all eyes will turn to the next ECB rate decision on Thursday. It is expected that another 25 basis point cut to 1% will materialize and the ECB may engage in additional “non conventional” measures- basically some form of Quantitative Easing to help the economy.

The European Union’s economic affairs commissioner recently declared that the European economy was in the “midst of its deepest and most widespread recession in the post-war era” and the euro zone will contract by 4% this year- this is more than twice than forecast in January.

In addition ECB president Jean- Claude Trichet is struggling to keep the ECB’s governing council united with the 22 members split in opinion on how far interest rates should be cut and whether the ECB should buy financial assets from the banks- so much is the wrangling that a vow of silence has been imposed on officials!

The German finance minister Peer Steinbruck has also noted concern that “competitive imbalances have built up within the euro area, increasing the exposure of some member states to the financial turmoil”. There is also a worry of other countries losing their competitiveness within the eurozone- in particular Italy and Greece.

Stateside, the Fed plans to deliver results of stress tests on US banks to executives today that may show about 10 firms need additional capital to weather a deeper recession. An obvious way for banks to fill their capital requirements is via conversion of preference shares to common shares.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Unfortunately it is the unknown that is causing the problem rather than anything definite and until we know whether the infectiousness of the virus, which originated in Mexico, can be contained by the World Health Organisation then we won’t be sure of the financial impact.

The death toll [...]]]> Swine Flu continues to dominate loans market chatter.

Unfortunately it is the unknown that is causing the problem rather than anything definite and until we know whether the infectiousness of the virus, which originated in Mexico, can be contained by the World Health Organisation then we won’t be sure of the financial impact.

The death toll in Mexico has risen to 149 and the WHO has upgraded its alert level to phase 4, one stage below the much more serious pandemic category. Phase 4 was the level at which the latter stages of the SARS outbreak was categorised.

Initially the Mexican Peso and the Antipodean currencies were hit hardest but concerns remain that if the situation worsens then sectors other than just agriculture will be affected.

The mediterranean countries are earmarked as likely targets (Portugal, Italy, Greece and Spain) with a downturn in air travel and tourism at a time that these countries can least afford it.

The Euro slipped sharply, not only on the move into Dollars but also following comments from ECB members Nowotny and Trichet.

The former stated that Eurozone rates would stay low for a long time and that the Central Bank was ready to use additional measures if necessary. Trichet reinforced this message saying the ECB will take decisions on new measures at their May 7th meeting.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The year on year drop in industrial production is the biggest drop since the series began in 1968. The year on year drop in manufacturing [...]]]> UK manufacturing and Industrial production data has been released this morning- both slightly better numbers than expected but that still does not hide the fact that it is grim reading.

The year on year drop in industrial production is the biggest drop since the series began in 1968. The year on year drop in manufacturing output is the biggest since Jan 1981.

Comments from ECB members suggest that the ECB has neared its rate cutting cycle with the sentiment that the ECB and other central banks now need to be vigilant for an upturn in inflation.

With data still coming in progressively weaker in the euro zone and expected to weaken further, inflationary pressure will be very difficult to manage. The Irish government is set to announce its budget- the expectation is for higher taxes and less spending…the economy is contracting sharply and its economy boasts the worst deficit in Europe.

Overnight the Reserve Bank Of Australia cut interest rates to a record low of 3.0%, with unemployment still rising there could be further cuts moving forward, RBA governor Glenn Stevens said the board saw scope for a further modest reduction.

Elsewhere, the Bank Of Japan left rates unchanged at 0.1% and expanded their list of acceptable collateral for money market operations to help liquidate the economy.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Economists had been expecting a bigger reduction of half a percentage point to 1pc, but speaking at a press conference after the monthly decision ECB president Jean-Claude Trichet did not rule out further cuts.

He said that [...]]]> The European Central Bank has cut interest rates in the eurozone to a record low of 1.25pc, down from 1.5pc.

Economists had been expecting a bigger reduction of half a percentage point to 1pc, but speaking at a press conference after the monthly decision ECB president Jean-Claude Trichet did not rule out further cuts.

He said that rates may be cut “in a measured way,” adding that while inflationary pressures were subsiding, the outlook for the economy remained poor.

“The latest economic data and survey information confirm that the world economy, including the euro area, is undergoing a severe downturn. Both global and euro area demand are likely to remain very weak over 2009, before gradually recovering in the course of 2010,” he said.

The ECB’s Governing Council has reduced interest rates by a total of three percentage points since early October, after the global financial crisis intensified following Lehman Brothers’ collapse in September.

Mr Trichet said the ECB would announce “non-standard” measures at its policy meeting in May in an attempt to stimulate the eurozone economy, which officially entered recession at the end of last year. The Organisation for Economic Co-operation and Development (OECD) predicted earlier this week that the eurozone economy would contract by 4.1pc this year. That is a significantly bigger drop than the 2.2pc to 3.2pc fall forecast by the ECB.

“We expect the ECB to trim its key interest rate to 1pc at its May meeting,” said Howard Archer, chief economist at IHS Global Insight. “It is possible that the ECB could eventually bring the interest rate down below 1pc but it looks reluctant to do this and instead will increasingly focus on “non-conventional” measures to boost economic activity.”

Options include the lending of funds to banks at fixed interest rates for longer periods, and the purchase of private sector assets.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

From the US we had several very interesting pieces of news – both good and not so good, but Wall Street ended focusing on the positive and the [...]]]> The G20 Conference in London stole the Press Inches but it was the yesterday’s economic and trading data plus financial announcements that provided the market with more interest.

From the US we had several very interesting pieces of news – both good and not so good, but Wall Street ended focusing on the positive and the DJIA closed on an up note, +2.01% higher.

On the positive, we had auto sales better than anticipated, probably supported by heavy discounting but good news nonetheless with numbers at both GM and Chrysler less negative than had been feared. We also had some positive news on the economic data front including a strong bounce in the ISM survey, although the ADP jobs number did come in marginally worse than had been predicted yesterday.

An indication of how slow the recovery of the US economy is going to be is the massive stock building of petroleum products as reported in yesterday Oil Inventory Data Release. The number is running at 4 times the 5-year average and indicates that OPECs best efforts to stabilise their market are not working.

More important for markets was an announcement from the US that the Fed would be buying Treasuries today and that the Treasury would not be issuing. This should leave longer term yields lower as QE begins to leave its mark but effects on currencies are more difficult to call.

With the ECB meeting scheduled for later today, this might very well leave Sterling as the Buyer’s choice (for today anyway) but the European Central Bank have been known to scupper the best laid plans before…..

Today, the main event will be the ECB meeting and the conference that follows. It is almost unanimous that rates will be cut by 50 basis points but the jury is still out as to what the press conference will contain.

The favoured view is that the ECB will give details of a Corporate Bond buying programme which would get its QE measures on the way. As mentioned above though, the ECB rarely miss the chance to disappoint and therefore a less market-friendly outcome is still a distinct possibility. The unknown is not a favoured position for market players hence the current Euro weakness on the exchange markets.

From the UK, other than anything from G20, the interest will surround the DMO’s (attempted) auction of £2.25 billion of 30-year gilts. This, remember, is outside of the BoE Reverse Auction buying range as was the 40-year auction that the DMO failed to fully get away last week.

Will they have learnt from the previous failed attempt? We will be told later…. Earlier this morning, the Nationwide revealed that house prices in March rose by 0.90% month-on-month versus a 1.90% fall in February, this, the first rise in the index since October 2007.

Loan Calculator suggest an aberration rather than a turning point.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Yesterday we saw unemployment levels rise to 8.6% as the powerhouse of Europe comes under real pressure- this will heighten the cause for more action from the ECB tomorrow.

Today, news from [...]]]> German retail sales for February have fallen 0.2% against the consensus of a rise of 0.2% this morning reinforcing the weak sentiment in Germany.

Yesterday we saw unemployment levels rise to 8.6% as the powerhouse of Europe comes under real pressure- this will heighten the cause for more action from the ECB tomorrow.

Today, news from G20 participants will dominate although there is a raft of data from the US later the most interesting of which will be the ISM survey. The question that needs to be answered is, does a scenario of very easy monetary conditions translate quickly into an improvement in underlying confidence.

I think that given what has gone before, this will not readily happen and that this type of statistic will disappoint for some time to come.

Overnight, the Japanese Tankan was released. The results were mixed but one has say, erred on the weaker side. Business sentiment for both manufacturing and non-manufacturing companies were marginally worse with large and small enterprises both anticipating conditions to deteriorate further during the coming 12-months. the Nikkei remained buoyed however by yesterday’s announcement of additional stimulus measures to be pushed through.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

However the currency markets reacted in a positive manner, continuing to buy Sterling – pushing it to a two month high against the Euro to €1.15 and above $1.45 against the dollar.

Sentiment is key and for the moment the markets [...]]]> Yesterday’€™s much anticipated 0.5 % cut by the BoE was greeted with derision from savers.

However the currency markets reacted in a positive manner, continuing to buy Sterling – pushing it to a two month high against the Euro to €1.15 and above $1.45 against the dollar.

Sentiment is key and for the moment the markets are backing the BoE and the UK government’€™s fiscal policy compared to the rigid stance from the ECB.

Yesterday it left rates unchanged but heavily intimated that rates would come down next month – its procrastination on fiscal policy is in the short term driving Sterling higher against the Euro.

Gold continues to move higher. It broke the $1000 barrier as more buyers entered the market. However their appearance did not support traditional commodity currencies such as the South African Rand and Australian Dollar, which continue to fall as their domestic outlook worsens.

In the US today we have unemployment numbers and expectations of another 500,000 jobs lost and although this is a backward looking indicator it does not bode well for the recovery in the US economy as the Obama effect evaporates.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The Euro stuttered and fell as traders were taken aback by suddenness and size of the European economic slowdown. German data added to the gloom with a [...]]]> EuroSat reported yesterday that Industrial Production in the Eurozone fell by a massive 7.7% in the past year to November following a downward revision to 5.7% for October.

The Euro stuttered and fell as traders were taken aback by suddenness and size of the European economic slowdown. German data added to the gloom with a back of the envelope calculation on the back of yesterday’s GDP release indicating that 4th Qtr GDP (workday adjusted) dropped by 1.4% which equates to a seasonally adjusted annualized rate of decline of an eye-watering 5.6%.

These sorts of numbers now put intense pressure on the ECB later today, to cut their Euro interest rate by at least 50 basis points with the economic environment screaming that nearer a full 1% is required.

Adding to the pressure was the French CPI figure which rose just 1% in the year to December, down from its 3.6% peak in July, and the likely revised figure for the Eurozone December CPI which is expected to show the inflation rate excluding energy for the region to be just 1.4% higher than 1-year ago (no change from the November figure). So not an inkling of any inflationary pressures here.

Nothing significant data-wise from the UK yesterday or today or tomorrow but there was plenty of bad news — AGAIN. Further forced redundancies in the Financial Sector, more bad news from within Corporate UK plc and a slumping stock market held Sterling back on the exchanges and gave UK bonds a boost with prices rising and yields falling.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The €˜workday adjusted number (whatever that is!) was even worse with a reduction from [...]]]> With data from Germany hurting the currency ahead of the ECB Meeting tomorrow, the German GDP figure for 2008 came in exactly as the market had anticipated at +1.3% but the fall from +2.5% the previous year still made unpleasant reading.

The €˜workday adjusted number (whatever that is!) was even worse with a reduction from 2.6 in 2007 to 1.0 in 2008. Added to this, the German engineering orders in November fell by 30% in real terms from the previous year with the quarterly fall reported at 16% from a year ago. The November fall was split evenly (domestic -32% and foreign -29%) showing that the downturn is indeed global.

The German Engineering Industry’s (VDMA) Chief Economist commenting on the figures said, “For the last quarter of 2008, the November figures point to a decline in orders never seen before. We believe there will be a decline in the production volume in 2009.”

It’s not a good sign and not taken very well by the currency.

This morning has also seen the repeat publication of an OECD report on the Eurozone which forecasts a 0.6% fall in GDP for 2009 and a view that the ECB has plenty of scope to cut their interest rates further. Another millstone.

And finally, following the announcements from Standard & Poors that several Eurozone countries’ long term rating were being put on negative watch/outlook, there were rumours aplenty that a good chance existed that one of the member countries would exit the Euro.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The ECB cut the rate it pays to deposit overnight money and increased the rate it charges for emergency loans. The concern from the ECB is that whilst they have slashed their base rate at the fastest pace in the ECB’s 10 [...]]]> As the market expected the ECB tweaked deposit rates to encourage more interbank lending.

The ECB cut the rate it pays to deposit overnight money and increased the rate it charges for emergency loans. The concern from the ECB is that whilst they have slashed their base rate at the fastest pace in the ECB’s 10 year history to 2.5% it may not be enough to stimulate the economy as long as banks are refusing to lend to each other.

Banks globally have little confidence in one another and consequently are hording cash and tending to deposit with the Central Banks.

From 21st January the ECB’s deposit rate will drop to 100 basis points below the base rate and the marginal lending rate will be increased to 100 basis points above it. Euribor set yesterday at 3.13, the lowest level since July 2006 – but still 63 bp above the base rate; in the seven years to August 2007, before the credit crisis began, the gap averaged only 15bp.

Trichet said on 15th December that there is a limit to how far the central bank can pare rates whilst yesterday Charles Bean (a UK MPC member) signalled that the UK could see rates reach 0%.

This divergence in outlook is continuing to stoke the negative outlook for the sterling euro cross. No doubt Euro zone exporters are hurting as we look towards parity. GBPEUR is currently trading at 1.0617 levels having rallied slightly from the record low seen at 5.20pm yesterday of 1.0456.

GBP was hammered again yesterday, it is currently trading arond 1.5030 level but looks set to test yesterday’s low of 1.49. This decline in Sterling from a peak of 2.0335 on 13th March to the year low seen on 4th December of 1.4680 represents a drop of 27.8%. This is the steepest yearly decline since the height of the Great Depression in 1931 when the pound was forced off the gold standard.

France’s manufacturing confidence fell to the lowest level in 15 years in December, adding to signs that Europe’s third largest economy may move into a recession for the first time since 1993.

Elsewhere, the Bank of Japan cut its benchmark interest rate to 0.1% (from 0.3%) in an effort to boost the economy. JPY saw a 13 year high yesterday against USD of 87.14 and is currently trading at levels of 88.55.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

The headline in the The Times this morning caused a quick skip in the heartbeat, “Banks under the cosh as £1 tumble towards Euro 1″. Loan Calculator wondered what on earth had occurred overnight !!!

As it happened, the headline was very much [...]]]> but it is Sterling that continues to bear the brunt of investor’s concerns.

The headline in the The Times this morning caused a quick skip in the heartbeat, “Banks under the cosh as £1 tumble towards Euro 1″. Loan Calculator wondered what on earth had occurred overnight !!!

As it happened, the headline was very much €˜for effect rather than based on the actual. Sterling is indeed at an all-time low against the Euro but over the past few days has actually stabilised at these levels.

The outlook remains clouded with a big danger of a further ratchet lower but as more dire news emerges from Eurozone, the prospect for a lower cross will diminish. On that note, the magnitude of the declines in both French and German industrial output, reported earlier in the week, were staggering.

This doesn’t bode well for tomorrow’s industrial output report for the whole of the Eurozone where the estimate is for a decline of 3.7% year-on-year. Somewhere down the line, probably not now until the New Year, there will be a re-assessment of exchange values with, in my view, the Euro being downgraded against all the majors.

We are now in the ‘dead-zone’ data wise with nothing scheduled to come from the UK or Germany for the next 2 days and only the Ind Prod number from the EU. The US and Canada are slightly more exciting but the whole pre-Xmas lull appears to be well and truly upon us. We do have the UK CBI monthly industrial trends survey later this morning but there are no prizes for guessing the mood of that.

As if to pre-empt the figure, the BoE’s Kate Barker, in the Scottish Herald paper, lays the situation out – bleak on the economic assessment, with any recovery in the UK unlikely to be evident until the 4th Quarter of 2009, with the likely pace of recovery, very hard to judge.

Elsewhere….. The big news overnight was the Korean central Bank cutting their official rate by a massive 100 basis points to a record low of 3%. This €˜super-investor in US Treasuries has now cut rates from 4.25% in early October in an unprecedented series of reductions and cites the need to tackle the persistent credit crunch and help the economy to cope with the global downturn.

This morning, the Swiss National Bank have also further reduced their rates by another 50 basis points, bringing their target band down to 0 – 1.00%.

In the US, The House of Representatives agreed to a $14 billion interim loan to GM and Chrysler to tide them over. The affirmation of the bail-out, however, still requires a positive vote following the Senate debate on the matter later today. If passed, this would just sees the two companies through to March 31st – the deadline by which they must file restructure plans (and even then they are not safe).

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.

Comments from Trichet and Andrew Sentence yesterday added to the uncertainty with the former intimating a [...]]]> But neither having a materially long-term effect on exchange rates. The market perception of lower interest rates to come remains unchanged in the market but differences of opinion as to magnitude of cut and timetable are starting to emerge.

Comments from Trichet and Andrew Sentence yesterday added to the uncertainty with the former intimating a pause in ECB rate cutting whilst Sentence appeared to argue both camps for Sterling.

The traditionally arch-hawk of the committee warned of a further weakening of the manufacturing sector in the UK (this followed the report that industrial output in October had fallen by 4.9% y-on-y – the biggest drop in over 6-years) with the recession lasting longer and going deeper than had been previously forecast.

He warned however that policy makers needed to look at different methods for handling the problem implying that interest rates being continually being reduced has less and less impact going forward.

The Zew data from the Eurozone and Germany yesterday were terrible which immediately caused the Euro to tumble through 1.2800. Rumours of semi-official demand however, caused the market to pause which was enough to see it rise sharply back towards 1.3000 where it stopped and near to where we start today.

Sterling fell on the weak UK data and then was hit with the double whammy when Euro rose against the Dollar. This left the cross hitting a new all-time low below 1.1400. This afternoon’s testimony in front of the Treasury Select Committee by the Chancellor, Alistair Darling looks like the next chasm for Sterling to negotiate. Although neither party will be out to put the skids under Sterling, the conversation and comment might be viewed very nervously from abroad.

Elsewhere the Canadians did indeed cut their rates as expected but by a larger amount, 0.75%, than had been anticipated. More rate cuts to come from them in the near future. The same conclusion can be reached for Sweden following the release of the sharpest fall in inflation (down from 4% to 2.5%) in their country in 15-years. The Riksbank are expected to progress with their rate cutting programme, with a target of 1% being achieved over the next 3 policy meetings.

In the US, the extreme short end of the Treasury market remains the focus. On Monday, the 3-month bill auction was completed at a yield of a mere 0.005%, but that was surpassed by the 4-week bill sale last night. The minimum bid rate was set at 0.00% with the ‘high’ bid being established at -0.06%.

In addition, even with a zero yield, the issue was covered 4.20 times and amazingly €˜non-professionals’ took 47% of the total – the second largest participation on record. In other words, it wasn’t just dealers causing those incredible results – the non-financial market is also quite willing to accept a zero yield (or less) in return for through year-end safety.

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There is also very little data [...]]]> In terms of volumes and liquidity left us trading very tight ranges yesterday and with tradition dictating an early close today in the US equity markets and with a lot of the rest of the workforce extending the holiday into the weekend, we are destined for another quiet one.

There is also very little data on today’s agenda and nothing market sensitive scheduled for the weekend.

This morning so far we have already seen a slightly better than forecast result for UK Consumer Confidence, much in the same vein as the rest of Europe and are left awaiting the CBI Distributive Trade Survey.

This is anticipated to be a weak number once again and with all the High Street bad news in the press, is likely to remain soft going forward. The FT, in an article this morning, ‘rubber stamp’ a 50 basis point cut by the ECB next week, which the market still feels will be the first of a few cuts in the coming months.

The UK still also expected to reduce rates by the same magnitude but the weekend press will be important for the health of Sterling going into December.

Other than that, we have the EU flash estimate for inflation and unemployment later this morning but that should be too little and too late to influence today’s end of month trading. This weekend sees an OPEC consultative meeting taking place in Cairo which should pave the way for discussions on a production cut at their official meeting later in December.

There are mutterings that OPEC want to reduce the current OECD oil stocks fall by about 100 million barrels to around 52 days of forward cover from its present 55 days.

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It is difficult to ascertain just how much of the recent press coverage is actual and how much is speculative. [...]]]> For those of you who have been away on a desert island for the past few weeks, today sees the UK Chancellor unveil his Kick Start for the economy thinly disguised as his pre-Budget Statement.

It is difficult to ascertain just how much of the recent press coverage is actual and how much is speculative. Suffice to say that whatever emerges will be the blueprint for the economy for the next couple of years and the analysis of the measures will determine the immediate direction for Sterling on the exchanges.

The one factor that is a cast iron certainty is that the BoE/MPC will be cutting rates further in December. The statement to Parliament commences at 3.30 this afternoon.

Also on interest rates. The ECB President said on Friday that the ECB could cut interest rates again at their meeting next month. These comments were echoed by 2 other €˜high powered members of the Central Bank but it wasn’t until ECB Director and Chief Economist Weber said the same thing later in the day, that anyone took any notice.

He talked off a remarkable decline in inflationary pressures and deteriorating economic prospects and culminated by stating that the Central Bank had leeway for further easing, if necessary.. it still looks as though we will see Euro interest rates 75 to€“ 100 bp lower by the spring.

Over the weekend we have seen further bail-outs, cash raising and capital increases in the Banking Sector. The most significant was the US Government ‘rescue’ of Citigroup Inc, the second largest bank in the States, to the tune of $300 billion.

After last weeks continued weakening of the sector, this has come as a welcome reprieve with Banking stocks surging on the European bourses first thing. From the UK, Standard Chartered decided to raise £1.8 billion via a cash call to boost its capital base probably more to do with that they could rather than that they needed to.

Meanwhile in Ireland, the Irish Government has agreed to take part in a Euro 3 billion bail out of Bank of Ireland that will be led by private equity probably of US origin.

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The consensus is that we will see a total in excess of 2 million imminently but from there it is anyone’s guess. If anything, [...]]]> Headlines, reading that 4,000 UK jobs were lost yesterday, have produced a raft of new estimates as to where the total number of unemployed will get to before this recession ends.

The consensus is that we will see a total in excess of 2 million imminently but from there it is anyone’s guess. If anything, it makes the employment and earnings data, scheduled to be released at 9.30am today, even more relevant than the release of the BoE Quarterly Inflation Report at 10.30am.

That’s not to say that the latter won’t be watched with great interest but you have to feel that the content will have been anticipated and flogged to death in the press already. Unless there is something within the report that is totally out of synch with previous comment, one must assume the composition will be of concern on growth, rapidly falling inflationary pressures and worries of an undershooting of the inflation target in 12-18 months.

The unemployment numbers are expected to show an increase in people out of work of 35,000 giving a rate of 2.9% but I would not be surprised to see a higher figure of 40,000+ and 3%.

Really, it is difficult to see what sort of figures/statement can help Sterling in the immediate term with markets likely to view anything positive as a blip in the continued descent into the mire.

There are of course other things afoot around the globe following the near Global-wide Bank holiday for Armistice / Veteran’s day yesterday.

Oil remains in the headlines with the recession led lack of demand keeping downward pressure on crude prices (WTI below $60 pb again to a 21-month low)) and talk of an additional emergency OPEC meeting, to try and cut production again, ahead of the scheduled mid-December get together in Algeria.

With the continued fall in demand it is difficult to see what OPEC can do. Keep their collective fingers crossed that there is a hard Winter, weather-wise, in the West and especially the US?

Following today’s UK data, attention will shift to a raft of statistics coming from the Eurozone and its participant nations. Yesterday’s German ZEW data gave a mixed message but by and large the current assessment still stinks.

Today we see Industrial Production estimates for September which are expected flat on the month with the danger on the downside.

Tomorrow the ECB will publish its monthly report for November which is likely to just put in print Trichet’s prepared remarks at last week’s post-Council press conference but on Friday we will see the preliminary estimates for 3rd Qtr GDP. This data is critical for the Eurozone. If, as seems almost certain, GDP turns out to have contracted again, then neither the ECB or anyone else will be able to argue against the fact that Eurozone is in recession.

This in turn will increase the likelihood that the ECB will cut rates regularly for the next 6-months until market rates reach the level with core inflation of about 1.75%.

Loans Calculators Blog- loans rates blog for news about interest rates- unsecured and secured loans, mortgages, remortgages and refinancing including home loans, equity release and consolidate debt loans.